7/10/2018: Taking Full Advantage of the 2017 Tax Cuts and Jobs Act

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Taking Full Advantage of the 2017 Tax Cuts and Jobs Act

Key Points to Discuss With Your


Like all things, tax laws are constantly

changing. An important part of serving

your clients is responding quickly and

strategically to new developments in the

tax law landscape. But at the same time,

a knee-jerk reaction is rarely the best

course of action—often resulting in

unforeseen complications in the future.

The best decisions are made by

professional teams working together to

analyze all angles of a situation to come

up with the best strategy in response to

the Tax Cuts and Jobs Act (TCJA), a

historic amendment to the Internal Revenue Code of 1986.

The TCJA affects many Americans in a variety of areas of life, and your clients might not

be aware of what its impact will be on their long-term financial plan. Of course, this law

is going on seven months old, but too many people struggle with taking action in their

financial and tax planning lives, so the historic nature of these changes cannot be


The law’s benefits will accrue most for those who take a proactive approach — rather

than those who wait until the last minute. Here are several reasons it needs to be top-ofmind

for both you and your clients:

· The increase in the standard deduction and the general lowering of individual tax

rates means that your clients have likely been enjoying more take-home pay.

· The elimination of the personal exemption means that depending on your client’s

marital status and number of dependents, they may not be able to lower their

taxable income as much as they had in the past. Some clients may face a higher

tax burden, as a result, even after taking into account the lowered rates.


Condie & Adams, PLLC

611 4th Avenue, Suite A

Kirkland WA 98033


Condie & Adams, PLLC is a

values-driven law firm

committed to providing

individuals, families and

small businesses with personalized, clientcentered

legal services in estate planning,

probate and trust administration, tax

planning, and related legal matters.

· The limitations on deductions for state and local income taxes (SALT) means that

for those clients in states or communities with high income taxes, their taxable

income may not be reduced as much as it had been in the past because they cannot

get credit for all the other forms of income tax they have paid. However, if any of

your clients are concerned about this, we may have some strategies (such as

Incomplete Non-Grantor Trusts) to help alleviate the new tax burden.

· The reduction of the alternative minimum tax for individuals means that fewer

individuals must deal with this burdensome and often-complicated tax.

· With the increase in the unified credit to $10,000,000, adjusted for inflation, there

has been a reduction in the overall number of estates affected by the estate tax. If

your clients had previous planning centered around saving estate tax, those plans

need to be re-evaluated to make sure that they are still working towards the

client’s long term objectives now that estate tax may not be a concern. Your

clients may also want to take advantage of the increase by making lifetime gifts,

particularly if they had previously used up their exemption in previous years.

· With the effective repeal of the individual mandate of the Affordable Care Act

effective in 2019, your clients will now have the choice of whether or not to carry

health insurance coverage without suffering the penalty of a fine. However, with

no requirement for coverage, it is speculated that the cost of insurance in the

marketplace could increase without the additional participants. Clients should

carefully balance the costs of paying for their own healthcare against the cost of

maintaining insurance, even after the mandate is gone.

The new tax developments are especially pertinent to your business-owning clients. With

the possible 20% income tax deduction for pass-through entities, they’ll want to review

entity selection for their business operations as soon as possible. Now is also the time to

consider gifting of interests to reduce the limitations inherent in the qualifying business

income calculation and to utilize the increased gift tax exemption.

For clients with “specified service businesses,” such as attorneys, doctors, dentists, and

consultants, it makes sense to consider separating any “non-service” businesses out of

their service business, such as real estate or clerical activity. Utilizing multiple trusts may

also help to facilitate business-owner clients achieve a larger QBI (qualifying business

income) deduction.

Planning Goes Beyond Taxes Too

The implications of the TCJA go much further than taxes alone. Your clients will always

need extensive guidance around asset protection, privacy, retaining control, avoiding

issues like guardianship and probate, and ensuring that their loved ones are cared for for

years to come. These aspects of financial and estate planning are constant regardless of

fluctuations of tax reform. Clients who haven’t considered these issues should discuss

them with an estate planning attorney as soon as possible.

These are sophisticated, complex, and multi-faceted planning strategies. For the right

client, they can save tens of thousands of income tax. But they can cost dearly if

implemented incorrectly. For this reason, collaboration with us and the rest of your

clients’ financial team is increasingly indispensable for success. Help your clients plan

for whatever comes next with the guidance of a well-rounded advisory team.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a

Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax,

accounting, financial, or legal planning strategies.

You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions

about this or any matters relating to estate planning.

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Condie & Adams, PLLC 611 4th Avenue, Suite A Kirkland WA 98033

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